IRS issues new guidance on W-2 reporting

The Affordable Care Act required informational reporting of the aggregate cost of employer sponsored group health plan coverage beginning with 2012 W-2s issued in January 2013 (ErisaALERT 2011-5 and ErisaALERT 2011-14). The IRS provides new guidance in Notice 2012-9 which restates and supersedes previous guidance. In this latest Notice, the IRS clarifies some of the Q's and A's in Notice 2011-28 and adds new Q's and A's. The changes are summarized in the introduction to the Notice. Read ErisaALERT 2012-02 for more information.

IRS posts FAQ regarding deferred vested benefit statement

The IRS has a long standing requirement to provided a benefit statement to participants who terminated and were reported on the Schedule SSA attached to the Form 5500.  The Schedule SSA has been replaced by Form 8955-SSA which requires plan sponsors to indicate whether or not the statement was provided to the participant (question 8).  There has been a flurry of discussions regarding how plan sponsors should answer that question.  The new FAQ should provide some comfort to plan sponsors and is reproduced below.

What are the requirements for answering “yes” to question 8 on Form 8955-SSA? Question 8 on Form 8955-SSA asks whether the plan administrator provided an individual statement to each participant required to receive a statement. The instructions to the Form add that the plan administrator must, before the expiration of the time for the filing of the Form, furnish to each affected participant a statement setting forth the information required to be contained in the Form. May the plan administrator satisfy this requirement by using other notices such as benefit statements and distribution forms? Also, does this mean that the plan administrator must furnish a notice that includes all of the information on the Form 8955-SSA? A plan administrator may answer “yes” to question 8 if the required information was timely furnished to participants in other documentation such as benefit statements or distribution forms. A separate statement designed specifically to satisfy this requirement is not required.  A plan administrator may answer “yes” to Question 8 if the statements or other documentation issued to the participants include the following information: Name of the plan Name and address of the plan administrator Name of the participant Nature, amount, and form of the deferred vested benefit to which such participant is entitled. Thus, for purposes of completing Form 8955-SSA, the plan administrator’s notice to the plan participant does not need to include the participant’s social security number, the codes on page 2 of the Form 8955-SSA used to identify previously reported participants, or any information regarding any benefits which are forfeitable if the participant dies before a certain date.

HHS Issues Informational Bulletin Regarding Essential Benefits

On December 16, 2011 HHS issued an Informational Bulletin announcing that it intends to propose that essential health benefits be defined using a benchmark approach. 

HHS may have "punted" defining essential health benefits to the individual states. States can select from four different benchmarks in defining essential health benefits. The Bulletin represents HHS' intended regulatory approach and encourages comments which are due by January 31, 2012.

Read our latest ErisaALERT to learn more.

EBSA Reissues Interim Policy on Electronic Delivery of Required Disclosures

On December 8, 2011 EBSA released Technical Release 2011-03R as well as a News Release. Technical Release 2011-03R is identical to Technical Release 2011-03 except to clarify that:

• continuous access websites are permissible if the plan administrator complies with the conditions in the technical release; and
• Investment-related information under DOL regulation 2550.404a-5(d) of the participant-level fee disclosure regulation may be furnished as part of, or along with, a pension benefit statement, either electronically under the conditions in the technical release or in paper form.

To read more, download our latest ErisaALERT.

Informational Copies of the 2011 Form 5500 Released

Advance informational copies of the 2011 Form 5500 annual return/report and related instructions were released yesterday. Information copies of the forms, schedules and instructions are available online at www.efast.dol.gov. These advance copies of the 2011 Form 5500 are for informational purposes only and cannot be used to file a 2011 Form 5500 annual return/report. Filers should monitor the EFAST website for the availability of the official electronic versions for filing using EFAST-approved software or directly through the EFAST website.

Modifications to the Form 5500 and Form 5500-SF for plan year 2011 are described under "Changes to Note" in the 2011 instructions, including:

• The actuarial schedules (Schedule MB and Schedule SB) have been updated to reflect provisions of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (“PRA 2010”).
• The instructions are updated to include the information in the EFAST2 Frequently Asked Questions explaining when a service provider who manages the filing process for the plan can get EFAST2 signing credentials and submit the electronic Form 5500 for the plan.
• The Schedule C instructions are updated to advise that for a multiemployer or multiple-employer plan, where the “plan sponsor” is the joint board of trustees for the plan, payments by contributing employers, directly or through an employer association, or by participating employee organizations, should be treated the same as payments by a plan sponsor.
• The Schedule I and Form 5500-SF instructions are updated to advise that for plans with fewer than 100 participants at the beginning of the plan year, any amount deposited with or repaid to such plan not later than the 7th business day following the day on which such amount is received by the employer or on which such amount would otherwise have been payable to the participant in cash, shall be deemed to be contributed or repaid to such plan on the earliest date on which such contributions or participant loan repayments can reasonably be segregated from the employer’s general assets.

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DOL and HHS Issue Guidance on Medical Loss Ratio Rebates

On December 2, 2011, the DOL issued Technical Release 2011-04 concurrently with HHS issuance of an Interim Final Rule regarding Medical Loss Ratio (MLR) rebates. The Interim Final Rule appeared in the December 7, 2011 Federal Register and requests comments no later than February 6, 2012.  The HHS guidance is expressed in terms of "subscribers" while the DOL guidance addresses ERISA group health plans.  If you provide health benefits via insurance, it's time to review your plan document language as it relates to rebates.

The TR notes that just because the plan sponsor is the policyholder doesn't automatically mean the plan sponsor is entitled to the rebate. The terms of the governing plan documents are critical in determining who is entitled to the rebate.

If you think you  might receive a rebate next year, check your plan documents!

For more details read our ErisaALERT.

 

DOL Issues Final Rule on Providing Investment Advice

On October 25, 2011 the DOL issued a final rule relating to the provision of investment advice to participants and beneficiaries in individual account plans and beneficiaries of individual retirement accounts (and certain similar plans).

Key takeaways for plan sponsors:

·         The selection of an investment advice arrangement is a fiduciary act.

·         The investment advice arrangement must be authorized by a plan fiduciary.

·       The computer model must be certified by an eligible investment expert. The fiduciary adviser is responsible for selecting the eligible investment expert.

·        Both the level fee and computer based investment arrangement must be audited annually by an auditor who is independent from the investment adviser. The fiduciary adviser is responsible for selecting the independent auditor.

·       The plan fiduciary must receive a copy of the independent auditor's report within 60 days of completion of the audit.

·         The fiduciary adviser must provide certain required disclosures to participants.

Read our latest ALERT for more details.